OnLive Was Acquired for Under $5 Million

When venture capitalist Gary Lauder purchased OnLive in August of this year, the company owed at least $18.7 million dollars, not including upcoming payments.

OnLive's business model wasn't working, so there was no way for it to pay back its creditors just by staying in business. Unable to raise further capital and on the verge of being shut down, the company had to liquidate its assets to pay back as much of the debt as possible.

Instead of a traditional bankruptcy, in which the company's resources and intellectual property would have been sold piecemeal at auction, OnLive went through something called an assignment for the benefit of creditors. In normal terms, it sold for practically nothing; but selling it intact still made up more of the debt (about a quarter) than auctioning it off in bits and pieces would have.

It also laid off all its employees, though some were hired back to run the new OnLive.

Still, $4.8 million! Compare that to Gaikai, OnLive's main cloud gaming competitor, which Sony paid $380 million for in July. OnLive's patent portfolio for streaming games was reportedly pretty strong too, but as one analyst told the BBC, "the sum is a reflection of the absolutely dire negotiating position [OnLive] was in when it made the sale."

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Jon Fox is a Seattle hipster who loves polar bears and climbing trees. You can follow him on Twitter and IGN.